Upcoming AWS Coverage on Zhaopin Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 11, 2017 / Active Wall St. announces its post-earnings coverage on Paychex, Inc. (NASDAQ: PAYX). The Company reported its third quarter fiscal 2017 financial results on March 29, 2017. The payroll processor and human-resources services provider topped earnings expectations. Register with us now for your free membership at:

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One of Paychex's competitors within the Staffing & Outsourcing Services space, Zhaopin Limited (NYSE: ZPIN), reported on February 20, 2017, its unaudited financial results for Q2 ended December 31, 2016. AWS will be initiating a research report on Zhaopin in the coming days.

Today, AWS is promoting its earnings coverage on PAYX; touching on ZPIN. Get our free coverage by signing up to:

http://www.activewallst.com/register/

Earnings Reviewed

For the three months ended February 28, 2017, Paychex reported total revenue (including interest on funds held for clients) of $795.8 million, up 6% on a y-o-y basis. Excluding interest on funds held for its clients, total services revenue grew 6% year-over-year to $782.6 million, an increase of 6% from $740.7 million for the year ago same period.

For Q3 FY17, Paychex's operating income increased 10% to $306.6 million. Operating income, as a percent of total revenue, was 38.5% for the reported quarter compared with 37.2% for the same period last year.

Paychex's Q3 FY17 net income and diluted earnings per share each increased 12% to $202.5 million and $0.56 per share, respectively. The Company's earnings, adjusted for pre-tax gains, were $0.55 per share. The earnings results topped Wall Street's expectations of $0.54 per share.

Segment Results

During Q3 FY17, Paychex's Payroll service revenue was $446.6 million, up 2% on a y-o-y basis, mainly driven by growth in revenue per check and its client base. Revenue per check improved as a result of price increases, net of discounts. Payroll service revenue growth for the reported quarter was tempered by approximately 1% due to one less processing day compared to the same period last year.

For Q3 FY17, Paychex's Human Resource Services ("HRS") revenue surged 12% to $336.0 million, primarily driven by increases in the Company's client base across all major HCM services, including: comprehensive human resource outsourcing services; retirement services; time and attendance; and human resource administration. The Company's largest HRS revenue stream, Paychex HR Services, which consist of administrative services organization and professional employer organization ("PEO") reported in strong growth in the number of client worksite employees served as of February 28, 2017, compared to February 29, 2016. Retirement services revenue also benefited from an increase in asset fee revenue earned on the asset value of participants' funds. Insurance services revenue benefited from higher revenue from our full-service Affordable Care Act product and growth in the number of health and benefit applicants, coupled with higher average premiums and an increase in clients in Paychex's workers' compensation insurance product.

Paychex's interest on funds held for clients increased 11% to $13.2 million for Q3 FY17 compared to the respective period last year. The increase resulted primarily from slightly higher average interest rates earned. The funds held for client's average investment balances were relatively flat for the reported quarter as the impact of client base growth was offset by the impact of timing of certain remittances to taxing authorities.

Financial Position and Liquidity

As of February 28, 2017, Paychex had cash and total corporate investments of $844.1 million. The Company's short-term borrowings totaled $55.4 million as of February 28, 2017. Cash flows from operations were $769.3 million for the nine months, a decrease of 3% from the same period last year. This decrease resulted mainly from fluctuations in working capital, partially offset by higher net income adjusted for non-cash items. On a year-to-date basis, the Company repurchased 2.9 million shares of its common stock for a total of $166.2 million.

Outlook

For FY17, Paychex is forecasting, Payroll service revenue to increase in the range of 3% to 4%, while HRS revenue is anticipated to increase in the range of 12% to 14% and total service revenue is expected to increase in the range of 7% to 8%. The Company is projecting interest on funds held for clients to reflect upper-single-digit growth. Paychex's FY17 net income (GAAP basis) is anticipated to increase approximately 7% and adjusted net income (non-GAAP) is anticipated to increase approximately 8%.

Stock Performance

At the close of trading session on Monday, April 10, 2017, Paychex's share price finished yesterday's trading session at $58.24, marginally up 0.09%. A total volume of 1.32 million shares exchanged hands. The stock has advanced 4.70% and 14.11% in the last six months and past twelve months, respectively. The stock is trading at a PE ratio of 26.41 and has a dividend yield of 3.16%.

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SOURCE: Active Wall Street